Investor: Despite falling energy prices, buy oil stocks.

Bill Smead, chief investment officer at Smead Capital Management, says energy stocks are still worth purchasing. He told CNBC's "Street Signs Asia" on Thursday that energy costs are going to rise.

He called the drop in crude prices "the first substantial correction" in a bull market that began when prices plummeted in 2020.

“You go from $20 a barrel to $120 and then pull back, and people say, ‘Oh yeah, that's all over,'” Smead said.

He said various variables indicate price hikes.

U.S. strategic stocks were depleted to satisfy demand, and supply is constrained, he said.

"What happens when China's economy opens fully... gets out of quarantine?" he questioned, implying that demand will rise.

China's covid flare-ups have forced lockdowns and lowered energy use this year.

When movement limitations are lifted, demand will rise.

"Oil stocks are good." “Buffett buys them here,” Smead replied.

Brent crude prices and U.S. West Texas Intermediate futures both topped $120 per barrel this year but are now $96.88 and $90.88 per barrel. Both benchmarks are up 40% year-over-year.

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